So, growth industries such as Internet finance, video games, film and TV, and virtual reality are just out of luck.

Well, Asia Unhedged is thinking that maybe China is out of luck. If you’re in an economy where all you can rely on are steel and commodities, you can get locked into a situation where you need to keep producing a lot more stuff than people can use, which pushes down prices and can create trade wars.

But that doesn’t seem to matter to the China Securities Regulatory Commission (CSRC). Chinese news outlet Caixin reported that a person close to the CSRC, said the securities regulator has prohibited listed firms from selling more stock to raise capital for investments related to Internet finance, video games, film and TV, and virtual reality.

Now this is the part that gets us, according to the source and an investment banker with knowledge of the matter, the four fields were singled out because they were viewed as not closely related to the so-called real economy, which is broadly defined as industries that produces tangible products and services,

But that’s not all, the CSRC has also stopped approving refinancing and merger and acquisition plans involving firms in these fields, the source said.

Caixin’s source said the regulator is worried that listed firms will take advantage of investor enthusiasm in video games, movie making and virtual reality technologies, which have shown signs of overheating.

Well, the US has seen that movie before. And it’s easier to stop all investment in an area than to sit down and evaluate each deal to determine which ones are valid.

In an effort to clamp down on a surge in fraud, the regulator also discouraged investment in the Internet finance.

“If a company that does not do its main business right branches out into an unrelated field, it is often just to create hype,” the source said. Letting this happen would mean, “continuing to inflate bubbles and ultimately hurt investor interests.”

The source added that the regulator has no problem with companies diversifying their portfolio as long as it remains in the real economy. So a cement factory would be allowed to sell extra stock if it planned to use the money to manufacture clean energy equipment, but not so if it wanted to buy a video game producer.

Even in the US, firms expand and invest in businesses outside of their core competencies with disastrous results. Usually because of the hubris or incompetence of management. But sometimes companies see the field they are in is dying and they need to adapt. So they branch out into new, growing fields and adapt to stay relevant and survive. It’s the way of the world and clamping down on everything will just create more problems.